U.S. stocks closed lower Friday, with the Dow Jones industrial average and S&P 500 closing below their 50-day moving averages and posting their first three-week losing streak since January. (Tweet This)

"I think the market's just gotten extended relative to earnings. This week just had those disappointing retail numbers out of the malls and that has led to a fairly broad sell-off. Most of them have done quite poorly," said Bernie Williams, chief investment officer, USAA Investment Solutions.

Consumer discretionary was the fifth-worst decliner, falling more than 1 percent to erase year-to-date gains and joining tech, health care and financials as the only S&P sectors in the red for the year so far. Utilities is the top sector performer year-to-date, with gains of more than 13 percent.

"My guess is (the Fed) will raise once this year," USAA's Williams said. "This data is supportive of a raise but it doesn't change my view that rates will be lower for longer."

The Dow Jones industrial average closed about 185 points lower after extending losses in afternoon trade with a brief decline of more than 200 points. Goldman Sachs, Boeing, Wal-Mart and 3M contributed the most to declines, while Apple, Intel and Travelers rose slightly as the only gainers.

"It doesn't look like anything specific, just looks like selling at the end of the day. It looks like money's flowing into bonds. I don't see any real catalyst. We've been weak most of the day," said Peter Coleman, head trader at Convergex.

Treasury yields were mixed, with the 2-year yield higher around 0.75 percent and the 10-year yield lower around 1.70 percent.

"If the Fed can hike twice this year the 2-year yield is not pricing that in," Brandon Swensen, co-head of the fixed income desk at RBC Global Asset Management, said in an email.

"The front end is focusing on the strong retail sales number and pricing that into the Fed's next move while the longer end remains in sync with stocks and risk sentiment," he said. "The flatter curve fits the view of slow growth and a slow but eventually tighter Fed."

The U.S. dollar index hit its highest in three weeks and held half a percent higher, with the euro around $1.13 and the yen around 108.7 yen against the greenback. The dollar index posted its fourth positive week in the last five.

The Dow and S&P closed below their 50-day moving averages for the first time since Feb. 29.

Katie Stockton, chief technical strategist at BTIG, said in an email that the S&P 500 closing below its 50-day moving average for the first time since February "reflects weak short-term momentum."

"Oversold conditions have returned on an intraday basis, such that Monday is likely to give way to a rebound," she said. "Regardless, the market had the opportunity for an oversold bounce this week, and its failure to take shape is a bearish development. Initial support is in the 2000 area, and a pullback of that magnitude would see an unwelcome pickup in downside volatility."

The Dow fell more than 1 percent for the week and the S&P lost half a percent, for their first three-week decline since the week ended Jan. 15. The Nasdaq composite fell about 0.4 percent for the week in its first four-week losing streak since October 2014.

U.S. crude oil futures settled down 49 cents, or 1.1 percent, at $46.21 a barrel, but held a weekly gain of nearly 3.5 percent. Earlier, Baker Hughes said U.S. oil rigs fell by 10.

"This trend we've seen since mid-February, where you got the unwind of the crowded trade, (it's currently) just more of a pause in what is an ongoing trend but not a break in either direction yet," said Aaron Clark, portfolio manager at GW&K Investment Management.

Stock index futures pared losses and U.S. stocks tried for gains in morning trade after the better-than-expected retail sales.

The SPDR S&P Retail ETF (XRT) closed nearly 1.4 percent lower for a weekly loss of 4.6 percent. The ETF posted its first four-week losing streak since last summer.

"The earnings reports I think are reflecting a bit of caution. When you look at the data broadly speaking beyond those companies I think you see a big (shift) back to spending that I think had been depressed because of the decline in the stock market," said Tony Roth, CIO at Wilmington Trust.

He said currency and Treasury markets indicated higher expectations of inflation, if not a Fed rate hike, while equity markets were "confused."

Shares of Apple eked out a 0.2 percent gain but remained around lows not seen since June 2014, after falling Thursday to close at those levels.

"I''m not sure investors and traders even know what they are looking at right now. I think they are more concerned about not being out of the market because of the Fed," Lance Roberts, chief investment strategist at Clarity Financial, said of morning market action.

"Everybody is pretty confident at this point the Fed may not raise interest rates in June," he said.

About two stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 861 million and a composite volume of 3.5 billion in the close.

High-frequency trading accounted for 49 percent of May's daily trading volume of about 7.23 billion shares, according to TABB Group. During the peak levels of high-frequency trading in 2009, about 61 percent of 9.8 billion of average daily shares traded were executed by high-frequency traders.

Gold futures for June delivery settled up $1.50 at $1,272.70 an ounce. However, the precious metal fell 1.65 percent for the week, its worst week since the week ending March 24.